HOW CAN THE EU CONTRIBUTE TO CREATING A HOSPITABLE ...€¦ · I was very pleased to see that your...

HOW CAN THE EU CONTRIBUTE TO CREATING A HOSPITABLE ENVIRONMENT FOR ENTERPRISES, BUSINESSES AND START-UPS TO CREATE JOBS?ANTHEA MCINTYRE MEP

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CONTENTSForeword – Rt Hon Michael Fallon MP p4

Introduction – Anthea McIntyre MEP p5

The Report as Adopted p6-24

• Job Creation p8

• Skills p9

• Entrepreneurship p12

• Demographics p15

• Market Access p16

• Finance p17

• Labour Market p19

• SMEs and Micro-Enterprises p20

• Better Regulation p22

• Recommendations p23

Explanatory Statement p26

Notice of Public Hearing p28

Transcript – Anthea McIntyre MEP’s Initial Statement p29

Transcript – Mark Hoban MP’s Statement p31

Response to Questions p34

Transcript – Syed Kamall MEP’s Statement p36

Anthea McIntyre MEP – Closing Statement p37

About the Report’s author p38

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Dear Anthea,

I was very pleased to see that your Report How can the European Union contribute to creating a hospitable environment for enterprises, businesses and start-ups to create jobs? was adopted by the European Parliament in Plenary on 15 April. The Parliament has a critical role to play in ensuring that the EU institutions minimise unnecessary regulatory burdens on business. I would like to thank you for pressing the importance of this agenda in the Parliament.

I was especially pleased to note the similarities between many of the recommendations in your Report and the COMPETE principles put forward in the ‘Cut EU red tape’ Report produced by the Business Taskforce on EU regulation (Competitiveness test; One-in, One-out; Measure impacts; Proportionate rules; Exemptions and lighter regimes; Target for burden reduction; Evaluate and enforce).

As your Report acknowledges, onerous regulation can place particularly heavy burdens on SMEs. I am, therefore, particularly glad that your Report calls for the scope of exemptions from EU regulations for micro-enterprises and adaptations of EU rules for SMEs to be widened. This very much reinforces the recommendations set out in “Cut EU red tape” – the implementation of which is one of my top priorities.

I also very much support your call for EP Committees to make use of the EP’s Impact Assessment Unit (IMPA) to analyse substantive legislative amendments. And I am very keen that in the next Parliament, EP Committees systematically invite the Commission to present their Impact Assessment at the start of Committees’ deliberations on legislative proposals. I would appreciate your thoughts on any practical steps that could be taken to bring this about.

I look forward to working with you to press the messages contained in your Report and hope to discuss this with you in the near future.

THE RT HON MICHAEL FALLON MPMinister of State for Business and Enterprise

The Rt Hon Michael Fallon MPMinister of State for Business and Enterprise

1 Victoria StreetLondonSW1H 0ET

T +44 (0) 20 7215 5000E [email protected]

www.bis.gov.uk

Anthea McIntyre MEPThe Chapel, Wythall Estate,Walford, Ross-on-WyeHertfordshire HR9 5SD

6 May 2014

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EU growth plans and Parliamentary edicts don’t create jobs – businesses do. As the Conservative Employment Spokesman, this has been my message to the European Parliament and its Employment Committee since I joined it in 2011.

Parliaments can, however, help to create a climate that encourages the establishment and growth of businesses – and it is how to create that hospitable climate throughout the European Union that this Report seeks to promote.

Jobs matter – unemployment is not only an economic problem but has severe social consequences too. It is a blight that affects far too many people throughout Europe and, whilst in some countries, such as here in the UK, impressive strides have been made in the last few years, even successful economies see whole communities where unemployment is accepted as an inevitable way of life.

This Report does not claim to have all the answers to solving either the economic or social problems that unemployment brings in its wake but it is a serious attempt to highlight that national governments can, and should, take action to create the right climate for businesses to establish, to grow and to flourish.

Exempting the smallest enterprises from many regulations would, at a stroke, remove a huge burden from businesses that don’t have access to the host of experts and advisers that large businesses have and free-up valuable time for the entrepreneurial driving-spirit to focus on more productive aspects of business.

To briefly set this Report in context, I should explain that Committees of the European Parliament can initiate reports which go to the Commission as Resolutions of the Parliament, and to which the Commission has to respond. These Own Initiative (INI) reports can have significant influence on future EU legislation and action. On my suggestion, the Employment and Social Affairs Committee agreed to produce this INI report with me as the Rapporteur or draftsman.

To inform the drafting process, we held a hearing in Brussels and I was delighted that Mark Hoban MP, the Employment Minister at the time, was invited as the keynote speaker. A full transcript appears later in this document.

One important aspect of the final Report was to highlight the recent trend of companies returning production and services to Europe (and especially to the UK) and the potential this brings for job creation. We have a unique opportunity to help accelerate this trend of returning jobs to Europe and we must take concrete steps to help businesses capitalise on this process of “re-shoring”.

The Report was passed by the European Parliament on 15th April 2014 and has been sent as a Resolution to the Commission and to the Council. I am grateful to all those who contributed their knowledge and expertise – one never achieves everything one wants, but I believe we achieved a great deal in the final text and I will be pursuing its recommendations in the new Parliamentary term.

Anthea McIntyre MEPConservative Employment SpokesmanSeptember 2014

INTRODUCTION

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Hospitable environment for enterprises, businesses and start-ups to create jobs

European Parliament resolution of 15 April 2014 on ‘How can the European Union contribute to creating a hospitable environment for enterprises, businesses and start-ups to create jobs?’ (2013/2176(INI))

The European Parliament,

– having regard to the Treaty on the Functioning of the European Union,

– having regard to the Commission communication of 3 March 2010 entitled ‘Europe 2020: a strategy for smart, sustainable and inclusive growth’ (COM(2010)2020),

– having regard to the Small Business Act (COM(2008)0394),

– having regard to the work of the Commission’s High Level Group of Independent Stakeholders on Administrative Burdens,

– having regard to the Commission Report ‘Minimising regulatory burden for SMEs – Adapting EU regulation to the needs of micro-enterprises’ (COM(2011)0803),

– having regard to the Commission communication on EU regulatory fitness (COM(2013)0685),

– having regard to the Commission’s Entrepreneurship 2020 action plan,

– having regard to the Commission communication ‘An action plan to improve access to finance for SMEs’ (COM(2011)0870),

– having regard to its resolution of 5 February 2013 on improving access to finance for SMEs1,

– having regard to the Late Payments Directive (Directive 2000/35/EC of the European Parliament and of the Council),

– having regard to the survey conducted by the Council of European Employers of the Metal, Engineering and Technology-Based Industries (CEEMET) entitled ‘Flexible employment contracts responding to changing market circumstances and meeting employee needs’2,

– having regard to the new programme for Employment and Social Innovation (EaSI) which will, among other things, extend the support given to microcredit providers under the current European Progress Microfinance Facility,

– having regard to the Eurofound Report of January 2013 entitled ‘Born global: The potential of job creation in new international businesses’,

– having regard to the Eurofound Report of 2013 entitled ‘Public policy and support for restructuring in SMEs’,

– having regard to the Eurofound Report of 2010 entitled ‘Job creation measures’,

– having regard to Rule 48 of its Rules of Procedure,

– having regard to the Report of the Committee on Employment and Social Affairs and the opinions of the Committee on Industry, Research and Energy and the Committee on Regional Development (A7-0101/2014),

1 Texts adopted, P7_TA(2013)0036.

2 http://www.ceemet.org/en/News/News/CEEMET-Survey-Flexible-employment-contracts-responding-to-changing-market-circumstances-and-meeting-employee-needs.htm

REPORT AS ADOPTED

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A. whereas the time it takes to start a business in Europe differs between Member States and varies from 4 to 40 days, which can impact on job creation;

B. whereas various factors including labour market rigidities have been identified in some Member States as having a negative impact on job creation, and the combination of job flexibility and security can provide a more favourable framework;

C. whereas the single market and European human resources potential can play a key role in achieving the Europe 2020 employment targets;

D. whereas SMEs are the backbone of the EU economy and have a huge potential for job creation, being responsible for 85% of newly created jobs;

E. whereas 20,7 million SMEs account for over 67% of private-sector employment in the EU, with 30% deriving from micro-enterprises;

F. whereas the cost per employee of complying with regulatory obligations can be up to ten times higher for SMEs than for large businesses (COM(2011)0803);

G. whereas due to the financial crisis and the credit crunch that arose in consequence SMEs are facing an extremely high cost of credit and the contraction of its availability; whereas, according to the Institute of International Finance, smaller businesses in the peripheral Member States are paying between 4 and 6 percentage points more for bank loans than their counterparts in central Europe, which is putting them at a significant disadvantage and thus hampering the region’s prospects for economic revival and net job creation;

H. whereas corporate bond, equity and securitisation markets in Europe remain relatively underdeveloped compared to other economies, and non-bank financing remains largely inaccessible to SMEs, undermining their potential to grow and create jobs;

I. whereas the effective provision of services is crucial for future growth, innovation and job creation;

J. whereas while we have the best-educated generation of youth in Europe’s history, and Member States have invested huge amounts of money in education and training, our young people are largely cut off from the labour market and their skills remain unused as they compete for temporary and underpaid positions;

K. whereas the European Social Fund has played an important role in assisting Member States to provide opportunities and training for unemployed people to re-enter the labour market;

L. whereas the unemployment rate for young Europeans aged between 15 and 24 has reached the unsustainable level of 23% and is above 50% in those Member States most severely hit by the crisis; whereas this massive youth unemployment leads to a huge brain drain and significantly undermines our capacity for sustainable growth in the future;

M. whereas the EU is threatened by the prospect of ‘jobless growth’, which will further undermine the social and economic fabric of our societies as well as the long-term prospects of the EU competing on an equal footing within a globalised knowledge-based economy;

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JOB CREATION

1. Is concerned at the cost, complexity and time involved in establishing a business in some parts of the European Union, all of which can impact negatively on future job creation; believes that if the EU is to improve its competitiveness and create more jobs, Member States must work to simplify and speed up this process, offer adequate assistance and support arrangements and make it less costly;

2. Notes that young enterprises that quickly and intensively internationalise after start-up show promising contributions to the economy by creating innovation themselves, fostering innovation in other companies, engaging in international supply chains and creating sustainable and good quality jobs; stresses, however, that these companies are confronted with considerable challenges at the start-up phase which have to be met quickly, while at the same time they have low levels of capital, so that low-cost, simple and quick start-up procedures would be beneficial for them;

3. Notes that global trends have created competitive pressures as well as opportunities for businesses; stresses the need for Member States to create the right regulatory and fiscal framework to foster the creation of jobs whilst ensuring a safe working environment;

4. Believes that in order to create a more hospitable environment for job creation, Member States must, with support from the Union where appropriate, put in place the reforms needed to address the following factors: skills, levels of qualification, entrepreneurship, the impact of demographic change, market access, finance, the labour market, rights at work, administrative costs and better regulation;

5. Emphasises the importance of research and innovation for enhancing the competitiveness, productivity, sustainability and job-creation potential of European SMEs, and notes the significant focus that Horizon 2020 and the EIT place on creating and supporting high-growth, innovative SMEs;

6. Highlights the job potential of the green economy, which, according to Commission estimates, could create 5 million jobs by 2020 in the energy efficiency and renewable energy sectors alone, provided that ambitious climate and energy policies are put in place; calls on the Member States to ensure sufficient levels of investment in these sectors, anticipate workers’ future skills, and guarantee the quality of ‘green jobs’;

7. Notes the important role of EU free trade agreements in creating and maintaining investment and jobs in EU Member States;

8. Takes the view that the steady development and deepening of the EU internal market is creating many substantial new opportunities for businesses of all sizes, clearly necessitating flexible framework provisions to promote entrepreneurship and self-employment, while the smooth functioning thereof requires a set of minimum regulatory standards, particularly in respect of public health and safety, health and safety in the workplace, food safety and environmental protection;

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SKILLS

9. Believes the EU is faced with serious skills shortages and mismatches in certain regions and sectors, which are hindering economic growth and the achievement of the Europe 2020 strategy; notes that there are over 1,85 million unfilled vacancies in the EU; is concerned that the latest results of the Survey of Adult Skills (PIAAC), conducted by the OECD and supported by the Commission’s DG Education and Culture, show that 20% of the EU working-age population has low literacy and low numeracy skills and 25% of adults lack the skills to make effective use of ICTs;

10. Notes the trend towards more skill-intensive jobs, with almost 90% of jobs expected to be created or become vacant by 2020 requiring medium or high qualifications;

11. Considers that active policies to promote training courses and further training of workers, continuing education, school-business partnerships and apprenticeships could permit better matching of skills to those sought by businesses;

12. Recognises, in view of the skills shortage, the benefits that lifelong learning and free movement of workers in the EU can offer in addressing labour market demand;

13. Stresses that, while excellence, innovation and human resources are what constitute the comparative advantages of the Union, dwindling investment in research, education and training, coupled with the particularly high unemployment rates in individual Member States and in the euro area, are driving many Europeans to seek employment on other labour markets; stresses that the brain drain is a major obstacle to growth, greater Union competitiveness and measures to promote entrepreneurship;

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14. Believes that some Member States’ education and training systems should be better adapted to and should converge with future businesses’ skills needs; notes with concern that in 2015 the estimated shortage of qualified ICT personnel in the EU will rise to between 384 000 and 700 000 and that the supply of STEM skills (science, technology, engineering and mathematics) will not match the increasing demands of businesses in the coming years, while the declining rate of women participating in those subjects has not been properly addressed; advocates that Member States be encouraged to establish dual education and training systems focusing on STEM subjects and to promote the retraining and further training of workers, particularly those with low or obsolete skills;

15. Underscores the importance of dual education and training systems, focusing particularly on STEM subjects and combining practice-based education in vocational schools with learning in the workplace, since this has proved the most effective means of smoothing the transition from school to labour market;

16. Welcomes the Commission’s communication ‘Opening up Education’, which aims to ensure that young people are equipped with digital skills;

17. Believes it is indispensable to introduce the teaching of entrepreneurship skills and programmes for learning how the market, the economy and the financial system operate, function and interact into basic education systems; believes that a well-prepared business plan is the first step towards better access to finance and viability; calls on the Commission and the Member States to include financial education and business start-up advice in their education programmes and to regard investment in entrepreneurial learning as a resource; supports, in this connection, the ‘Erasmus for Young Entrepreneurs’ programme, which is designed to promote an entrepreneurial culture and develop the single market and competitiveness;

18. Underlines the need to improve the pace of the school-to-work transition, thus enabling the young to enter the labour market as soon as possible and avoiding the risk of the NEET (‘not in employment, education or training’) phenomenon;

19. Notes that the European Structural and Investment (ESI) Funds provide support for authorities and stakeholders at the local, regional and national levels to foster, inter alia, work-based learning, research, development and innovation and to improve the competitiveness of micro enterprises (especially one-person businesses) and SMEs, through cooperation with science and research facilities, thereby helping tackle the current economic and social challenges, in particular the high unemployment rate;

20. Stresses that efforts to support growth, innovation and job creation in a sustainable economy should guarantee health and safety standards and ensure a balance between economic, social and environmental requirements, while, inter alia, supporting smart specialisation, respecting the ecosystem and leading to adequately paid, quality jobs in all regions of the EU; underlines, in this connection, the important role to be played by businesses and the education sector through cross-border projects, cooperation between universities and other high-quality educational institutions and the creation of innovative ‘clusters’; calls for local and regional funding programmes for apprenticeship training to be facilitated;

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21. Considers that completion of the digital single market will help support and develop SMEs; considers it necessary to ensure that the necessary qualified ICT staff are available and that the European public possesses the digital skills necessary to make use of ICTs;

22. Stresses that, in order to address the skills shortage Europe is currently facing, urgent action is needed to speed up women’s access to scientific and technological training and occupations, particularly in the new information and communications technology sector;

23. Calls for initiatives that will foster partnerships between businesses, research centres and universities and provide the necessary skills to enable Europeans to access ICT-related, energy-related and high-tech manufacturing jobs;


ENTREPRENEURSHIP

24. Is concerned that the number of EU citizens who want to be self-employed has dropped from 45% to 37% in the last three years, almost one half being afraid of going bankrupt and more than 50% saying it is difficult to obtain sufficient information on how to start a business; considers that SME growth is linked to entrepreneurship; stresses that start-ups and self-employment create employment opportunities and help build strong industrial and services sectors, and advocates, therefore, that Member States be encouraged to promote entrepreneurial mindsets and skills at different education levels and to put in place business start-up advice in universities and vocational training colleges; notes with concern that women represent only 30% of all entrepreneurs in Europe; stresses the need to promote female entrepreneurship by facilitating access to technical, scientific and business support networks and the development of coaching/mentoring programmes for women entrepreneurs;

25. Notes that the ‘risk’ factor regarding self-employment and the adverse effect of the recent economic crisis on borrowing conditions is a deterrent to engaging in such entrepreneurial activities; recommends, accordingly, that consideration be given to adoption of measures by Member States to balance the welfare safety net for the self-employed without detracting from the flexibility of this particular type of activity;

26. Notes with concern that the financial crisis and the subsequent recession have hit many European SMEs hard and that a significant number have ended up in liquidation, rather than with the company getting a fresh start; highlights the importance of a favourable regulatory framework to favour healthy restructuring and therefore job retention; welcomes the Commission’s Entrepreneurship Action Plan supporting Member States’ efforts to make it easier for sound businesses to survive and for honest entrepreneurs to get a second chance, since this will have a positive impact on job creation; urges the Commission to come forward with an overview of actions taken in the different Member States to enhance the climate for entrepreneurship; underlines the responsibility of the Member States to fully use the support offered by the Commission for improving the climate for entrepreneurs; welcomes the Commission’s efforts to inform citizens and businesses about funding opportunities through publications such as ‘Overview of the financial rules’ and ‘Funding opportunities 2007-2013’;

27. Welcomes the Programme for the Competitiveness of Enterprises and SMEs (COSME) and the SME instrument provided for under Horizon 2020; laments the fact, however, that the budget for COSME and for SMEs in Horizon 2020 under the multiannual financial framework is limited;

28. Welcomes, in particular, the specific actions provided for under COSME which are designed to improve framework conditions for enterprises, particularly SMEs, to facilitate access to finance and markets, and to promote entrepreneurship and entrepreneurial culture; stresses that in order to promote the development of entrepreneurship in Europe a predictable and clear regulatory environment is essential; expects measures and actions promoting entrepreneurship at European or national level to cover enterprise models of all types, including cooperatives, craft businesses, liberal professions and social enterprises; welcomes especially the continued support for equity and debt finance provided under Horizon 2020 and COSME;

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29. Believes that young entrepreneurs are enablers of innovation and job creation; underlines the need to connect experienced mentors to aspiring young entrepreneurs and facilitate the creation of support structures in innovative start-ups; welcomes schemes such as Erasmus for Young Entrepreneurs that are aimed at helping new entrepreneurs acquire relevant skills for managing a business, and believes that such programmes should be further promoted in order to help more entrepreneurs develop and create jobs; calls on the Member States to promote the practical aspects of entrepreneurial education and training in schemes such as school-company projects and training placements; calls on the Commission and the Member States to take this into account in the implementation of the COSME programme; welcomes the strengthening of the European Institute of Innovation and Technology (EIT), with its clear focus on providing entrepreneurial and innovative skills to 10 000 Masters’ students and 10 000 Ph.D. students by 2020;

30. Calls for support for EU mobility programmes for entrepreneurs, such as Erasmus for Young Entrepreneurs, and for entrepreneurship education to be included in national school curricula through the exchange of best practice;

31. Notes the importance of establishing and supporting business incubators, to provide young entrepreneurs with the opportunity to test their ideas and familiarise themselves with business networks and help them contact potential partners, clients and investors; believes that EU funding can play an essential role, and stresses the success of EU-funded projects and university programmes such as the ERDF-financed Birmingham Skills for Enterprise and Employability Network (BSEEN) in the UK which nurture enterprises and entrepreneurial skills by providing mentoring, intensive start-up support and incubator space for new ventures, and are thus key to future job creation;

32. Draws attention to the fact that, faced with the threat of closure, workers in many European companies can take over the ownership of those companies through cooperative societies; calls for consideration to be given to possible new lines of support through the European Globalisation Adjustment Fund and the European Investment Bank for companies involved in key sectors under the Europe 2020 strategy;

33. Is concerned at the growing phenomenon of bogus self-employment in the European Union; calls on the Member States to adopt specific policies to prevent this, such as sufficient employment opportunities or better labour inspection;

34. Calls on the Member States to promote a culture of internationalisation through information, the presentation of good practices and the provision of a platform for information exchange; urges them to provide skills development in the field of entrepreneurship with an international focus, to promote transparency as regards available support tools for start-ups, to support networking and exchanges that link young entrepreneurs with potential investors and business partners, and to provide operational advice and support even after the start-up phase in order to help them get through the critical early years and provide incentives for employment;


35. Emphasises the importance of providing young Europeans with entrepreneurial education and encouraging entrepreneurial attitudes; notes, in this context, the landmark role that the EIT plays in promoting an entrepreneurial culture through education, training and practice; notes that all the EIT’s Knowledge and Innovation Communities actively promote entrepreneurship in their respective fields, through the development of curricula that combine excellent science and innovation with entrepreneurial skills and experiences, thus preparing the entrepreneurs of tomorrow and infusing existing businesses with an innovative and entrepreneurial mindset;

36. States that it is of the utmost importance for the EU’s social cohesion to tackle the high unemployment rates, in particular among young people and other vulnerable groups, in the EU by boosting regional competitiveness and employment and fostering an entrepreneurial spirit; calls, therefore, on the Member States to use the ESI Funds to focus on creating sustainable jobs and business opportunities by providing a hospitable environment and the right regulatory framework for micro-, small and medium-sized enterprises, businesses and start-ups;

37. Points out that the ESI Funds have an important role to play in supporting employment and concrete projects aimed at enhancing entrepreneurial, enterprise and creative skills, including those of young people; underlines the need for all Member States and regions to make full use of this opportunity in order to tackle youth unemployment; stresses that, through the ESI Funds, local and regional authorities should pay particular attention to promoting entrepreneurship at local and regional level, including a focus on start-ups by young people;

38. Welcomes the growth in recent years of the social economy as a new form of entrepreneurship in the European Union, particularly for young people; calls on the Member States to develop strategies and programmes promoting the social economy;

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DEMOGRAPHICS

39. Believes that, given the widespread phenomenon of ageing populations, Member States should be encouraged, inter alia in the context of solidarity between the generations, to promote the retention of older workers, both women and men, on the labour market, by valuing experience; stresses that an older labour force and longer working lives can make a positive contribution to the recovery and to future growth; emphasises, therefore, the importance of lifelong learning, in particular for older workers; stresses, finally, that older people are indispensable with a view to passing on knowledge and experience to younger generations;

40. Believes in the importance of promoting senior entrepreneurship as a means of engaging the senior population with significant business experience in the innovation process, thereby extending working lives and retaining indispensable skills in the labour market;

41. Calls on the Member States to effectively implement the EU legislation outlawing discrimination in the workplace on the grounds of age, disability, sexual orientation or religion or belief;

42. Recognises the importance of taking into account the situation of people who have to reconcile work and family life;


MARKET ACCESS

43. Stresses that the opportunities afforded directly by the EU single market must be used to inject new life into Europe’s economies by opening up borders, removing existing obstacles that hamper workers’ mobility, and creating new business opportunities and jobs;

44. Calls for the remaining barriers to the cross-border provision of services to be dismantled, thus enabling them to create more jobs;

45. Stresses that for SMEs, size does matter, and that a larger scale allows SMEs to more easily withstand economic cycles, build deeper expertise, find new customers and markets, link into global supply chains, and obtain easier access to bank financing and broaden funding sources, thus creating more jobs; believes that the Commission and the Member States should encourage the provision of education in management and business strategy for SME owners looking to expand their businesses; highlights the importance of aid to SMEs to develop connections to untapped foreign markets by redirecting existing public agencies to work with banks and SMEs’ associations to-wards that end;

46. Stresses that the introduction of suitable and flexible single market framework provisions to promote entrepreneurship and support the small and medium-sized undertakings that form the economic backbone of the Union must not, under any circumstances, be achieved to the detriment of minimum European labour standards and fundamental labour rights;

47. Notes that it is crucial to ensure support for SMEs aiming to internationalise through medium- and long-term loans or equity investments, and to educate SMEs in how to access trade financing;

48. Notes the importance that the digital economy has for creating jobs, especially when linked to sectors in which Europe is traditionally strong, such as the creative industries, cultural heritage and tourism;

49. Stresses that free and fair competition in the single market, underpinned by common social standards, is of crucial importance for boosting growth and innovation and thereby increasing employment in the Union;

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FINANCE

50. Notes that bank lending is still the most common source of finance in Europe; believes however, that there are real benefits in new forms of financing through innovative schemes and non-bank routes, such as crowdfunding, SME angels, peer-to-peer lending, micro-lending, easily accessible microcredit agencies and other tools, which can provide vital investment for start-ups and SMEs to grow and create jobs; believes that new forms of financing would be beneficial for young, dynamic businesses which have difficulties in accessing more traditional sources of finance due to their ‘newness’; stresses that such new forms of financing should not be limited to start-up and growth phases and that fostering alternative capital markets would also be beneficial for realising positive outcomes for both companies and their employees, for example in cases of restructuring;

51. Considers it extremely important for Member States to implement Directive 2011/7/EU on combating late payment in commercial transactions, under which, with regard to transactions between undertakings and public authorities, the contractual payment period must not exceed the time limits laid down in Article 4(3) unless otherwise expressly agreed in the contract and provided it is objectively justified in the light of the particular nature or features of the contract and in any event does not exceed 60 calendar days;

52. Emphasises that non-innovative and established SMEs looking to expand into new markets or to transfer their ownership often also need public support in order to secure the necessary financing;

53. Stresses that the cohesion policy for the 2014-2020 period is an important and effective instrument for generating smart, sustainable and inclusive growth and achieving the Europe 2020 targets while supporting, through a wide range of measures and innovative financial instruments, the start-up and development of small and medium sized enterprises (SMEs), including micro-enterprises, as a key motor of job creation in the EU;

54. Welcomes initiatives to make it easier for citizens, organisations and businesses, in particular SMEs, to access EU support via a single multilingual portal offering information on the Structural Funds, including the ESF Horizon 2020 and COSME; also welcomes the Enterprise Europe Networks endeavours in this field; believes, nonetheless, that more must be done to disseminate clear and comprehensive information about funding opportunities to existing and potential entrepreneurs through ‘one-stop shops’ throughout the regions, and to encourage financial intermediaries to make greater use of the funding sources available;

55. Asks for a better coordination of EU funding mechanisms, including Structural Funds, ERDF, Horizon 2020 and EIB investments, especially when it comes to funding innovative SMEs, and asks for an assessment of current obstacles arising from the fact that in several Member States banks fail to transfer funds and loan guarantees to SMEs and the real economy;

56. Underlines the importance of research and innovation for enhancing the competitiveness, productivity, sustainability and job-creation potential of European SMEs, and notes the significant focus that Horizon 2020 and the EIT place on creating and supporting high-growth innovative SMEs;


57. Welcomes the creation of an SME instrument under the Horizon 2020 programme enabling SMEs to access financial and non-financial support in order to implement innovative ideas; calls on the Commission to introduce this instrument as of 2014 in the most SME-friendly way, i.e. through a single dedicated agency, allowing for the genuine ‘bottom-up’ submission of projects and supporting all types of innovation, including non-technological and social innovation;

58. Points out that firms, however, often face problems in finding money to finance their research, develop new products or access new markets;

59. Supports EU initiatives which help SMEs access more financial resources with greater ease, on the grounds that they make for easier, faster access to funding for young and innovative companies, encourage Member States to adopt mechanisms to foster innovation (e.g. tax credit mechanisms to fund research and innovation) and redress inequalities between Member States; supports initiatives seeking to encourage entrepreneurs whose businesses have failed, so as to offer them a second chance and not discourage risk-taking;

60. Welcomes the simplification of reimbursement methods as part of the Commission’s proposal for a Common Provisions Regulation on the Structural Funds, given the important role that these instruments play in many regions in the promotion of entrepreneurship and skills; asks the Commission to monitor SMEs’ access to Community funding and to Report to Parliament on the matter;

61. Takes the view that public investment and state support for the setting-up and continued operation of undertakings is crucial; believes that Member States should demand safeguards and guarantees from companies setting up in each Member State and receiving public support; with the objective of preserving jobs;

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LABOUR MARKET

62. Strongly believes that businesses could create more jobs if the right conditions exist, including access to a qualified and highly-skilled workforce, work-life balance, reasonable costs and taxes, and keeping administrative and regulatory burdens to a minimum;

63. Notes the importance of workplace flexisecurity, on the one hand in giving workers a fair degree of security and on the other in allowing economic operators to react in a flexible way to changes in the market;

64. Sees the introduction of ‘youth coaches’ in employment agencies as an important step towards further reducing the numbers of young people who fail to make the transition from education to the labour market;

65. Believes Member States must invest more in human capital and be more responsive to labour market needs, notably by ensuring strong links between the world of education and the world of work, ensuring that young people are equipped with the right information, advice and guidance to make sound career choices, and fostering work-based learning apprenticeships, as well as retraining of employees and provision of lifelong learning opportunities;

66. Considers that there is major scope for increasing the involvement of the social partners and the bodies concerned in the formulation of a long-term strategy for small and medium-sized enterprises, this being the only way to identify malfunctions, formulate intelligent and flexible legislation, avoid market fragmentation and promote the creation and development of sustainable and quality employment;

67. Calls on the Commission and the Member States to create viable transition schemes from higher education and vocational training to the labour market, especially for first-time young professionals;

68. Calls on the Member States to continue taking policy measures, accompanied by economic and regulatory incentive mechanisms, which shape culture and educational systems through the creation of partnerships and exchange networks between all the various levels of education and companies, in order to bridge the current gap between academia and the market and make it easier for researchers to move from universities to companies, thereby fostering innovation;


SMEs AND MICRO-ENTERPRISES

69. Considers that SMEs are the main drivers of innovation and economic growth in the EU and play a crucial role in providing pathways into work for people of all ages and for both women and men; regrets that in many Member States they are excluded from public research, innovation and development policy;

70. Highlights the importance of SMEs not only in creating but also in preserving jobs;

71. Points out that more than 20 million SMEs in the EU represent 99% of businesses, and that SMEs are a key driver of economic growth, innovation, employment and social integration;

72. Believes that public policy measures play an important role in supporting and stimulating the creation and development of SMEs (e.g. affordable loans, advisory services on public initiatives and legislation, incubators and accelerators, clusters, technology transfer offices, coaching and mentoring schemes, etc); considers that networking and the exchange of best practice play an important role in this respect; believes that intangible and non-financial forms of support, such as access to knowledge and information, financial education and business networks, are essential for new entrepreneurs and SMEs to develop their businesses; considers that, in order to stimulate the internal market and trade among small businesses, it is particularly important to ensure the mutual recognition of occupational qualifications and the interoperability of different commercial regulatory systems;

73. Believes that innovation in SMEs is an important route to job creation; points out that if SMEs are to participate successfully in the innovation system, it is essential that they are in the driving seat with regard to their innovative activities and that support is better tailored to their real needs;

74. Underlines the ‘think small first’ principle; recognises the benefits of crossborder e-commerce in providing new opportunities for SMEs to access the single market, create employment opportunities, reduce costs and compete globally;

75. Stresses the opportunities offered by ICTs in terms of enhancing productivity and competitiveness; emphasises the need for the potential of the digital single market to be unleashed, and points out that the cost of creating an innovative ICT start-up has fallen by a factor of 100 in the last ten years, mainly as a result of technologies such as ultra-fast and ubiquitous broadband, cloud computing, open-source software, open data and access to public-sector information;

76. Highlights the fact that eGovernment is particularly beneficial for entrepreneurs (particularly SMEs, who often face insurmountable barriers when operating across borders within the EU), as it brings reduced administrative costs and burdens, increased productivity, efficiency, competitiveness, transparency, openness, policy effectiveness, accessibility and streamlining of procedures;

77. Believes that the lack of adequate protection for SMEs can in many cases cripple businesses and stall economic growth, and may also discourage entrepreneurs from taking chances, which will impact on their ability to grow and create jobs;

78. Notes that the main barriers facing start-ups and affecting the development of high-growth SMEs are difficult access to and cost of finance, burdensome regulation, lack of knowledge of regulations, indirect costs, restricted access to export markets, average payment times and skills shortages;

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79. Welcomes the introduction of the ‘SME test’ and the Commission’s commitment to propose lighter regulatory regimes for SMEs and exemptions for micro-businesses on a case-by-case basis, without compromising on health, safety and employment standards; believes that mitigating measures must be introduced across a range of legislative proposals, e.g. longer implementation time, efficient and effective inspections, or guidelines to simplify firms’ paperwork, but without creating a two-tier labour market;

80. Welcomes initiatives such as the CREATE project which address the barriers to growth and job creation and competitiveness experienced by SMEs in rural areas;

81. Believes that Member States must be encouraged to share best practice – for example, through the European Network of SME Envoys on innovative ways to create jobs, by reducing bureaucracy and red tape and improving communication, particularly for SMEs and microenterprises;

82. Urges the Commission and the Member States to help local authorities and SMEs’ associations promote local production and product quality, for example through the formation of business clusters for joint research and development projects;

83. Believes that also organisations representing SMEs should be encouraged to share cross- border best practices on innovative ways to reduce bureaucracy and red tape;

84. Regrets that the labour reforms taking place in various Member States are resulting in many workers no longer being protected by collective agreements, especially in SMEs; considers that any improvements in labour flexibility should be accompanied by adequate labour protection;

85. Believes that the framework for SME participation in public procurement should be improved;

86. Notes that in many Member States there is insufficient support and/or an insufficient regulatory framework to ensure appropriate conditions for young and innovative companies and start-ups, and stresses the need for better coordination of the different European, national, regional and local policies and instruments concerning SMEs;

87. Stresses the need to strengthen EU rules on product traceability, so as to combat counterfeiting and create an effective means of encouraging the development of SMEs;


BETTER REGULATION

88. Stresses the need for more efficient and more clearly-worded regulations that can be implemented in a simple manner and can help all actors, including entrepreneurs, operate within the rule of law and enable both entrepreneurs and employees to benefit from the opportunities and protection afforded by employment and health and safety legislation;

89. Underlines the need for greater integration of Union policies in favour of SMEs as regards innovation, growth, competitiveness, internationalisation, entrepreneurship, resource productivity, reducing bureaucracy, the quality of human resources, and environmental and social responsibility;

90. Acknowledges the Commission’s actions to address the results of the review of the ‘Top 10’ most burdensome laws for SMEs, which will help businesses create more employment opportunities; believes that the Commission should urgently prioritise the improvement of these regulations in ways that address SMEs’ concerns; believes there is a need to ensure that the EU and Member States take account of the specific needs of, and considers support measures for businesses, in particular SMEs and micro-enterprises, in the policy process;

91. Points out that young companies which internationalise rapidly and intensively after their start-up phase make useful contributions to the economy by creating innovation, encouraging other companies to innovate, taking part in international supply chains and creating sustainable high-quality employment; notes, however, that since these companies face considerable challenges during the start-up phase due to low levels of capital, low-cost, simple and quick start-up procedures would be of benefit to them;

92. Stresses that rules on health and safety at work and workers’ protection cannot be considered as burdensome regulations; calls on the Commission to simplify excessive administrative burdens while always ensuring health and safety at work and guaranteeing that SMEs have adequate knowledge and resources enabling them to manage their employees’ working environment properly;

93. Notes the new health and safety strategy; hopes it will focus on prevention, usability, clarification, simplification, prevention, and better implementation of existing legislation in order to ensure workers’ health and safety;

94. Welcomes the reduction of REACH registration fees for SMEs, even though fees represent a fraction of overall compliance costs; is extremely concerned, however, that initial cost estimates from REACH were underestimated, with this difference already amounting to over EUR1 billion – a figure that will continue to rise;

95. Stresses the need to improve overall business efficiency through projects and instruments which make it possible to confront the challenge of energy recovery with a view to encouraging reduced energy costs;

96. Points out that the provisions of the regulations for the 2014-2020 cohesion policy period aim to reduce the administrative burden on micro-enterprises and SMEs, particularly as regards the activation of unemployed people, thereby contributing to better conditions for job creation; calls on the Member States to do away with the obstacles standing in the way of better implementation of the ESI Funds for the benefit of micro-enterprises and SMEs;

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RECOMMENDATIONS

97. Calls on the Commission and the Member States to act with speed and ambition to reduce the regulatory burden on SMEs, while ensuring that any proposed solutions are evidence-based and respecting health and safety and Article 9 TFEU;

98. Calls on the Commission and the Member States to fully exploit the job potential of the green economy by developing a Renaissance of Industry for a Sustainable Europe (RISE) strategy that pursues technological, business and social innovation towards a third industrial revolution including a low-carbon modernisation offensive; argues that RISE will create new markets, business models and creative entrepreneurs, new jobs and decent work, bringing an industrial renewal with economic dynamism, confidence and competitiveness; believes that energy and resource efficiency are key pillars of such a strategy;

99. Considers that an appropriate approach could be offered by the Commission’s proposal that micro-entities should be excluded from the scope of future proposed legislation unless there is a need for them to be covered;

100. Calls on the Commission to ensure that national SME organisations are part of the newly-established network of SME Envoys and the SME Assembly and are properly informed of EU initiatives and policy proposals; stresses, in this context, the equally important role of the European Information Centres (EICs), which have so far not managed to provide a service that lives up to the expectations and needs of European businesses;

101. Calls on the Member States to promote language learning through lifelong learning (vocational training), for employees of SMEs and micro-entities, as a means of reinforcing access to and participation in the single market for such firms;


102. Asks the Commission to ensure easier access for SMEs to structural funds, notably by relaxing the requirements for pre-financed projects, reducing the requirements for cofinancing, better targeting different types of SMES, closing the financing gap between call cycles, and supporting capacity-building for SME funding;

103. Recommends MEPs to make full use of the Impact Assessment and European Added Value Directorate in order to scrutinise the cost, benefits and other implications of proposed draft legislation on SMEs and job creation in particular;

104. Calls on the Commission and the Member States to be more rigorous in assessing the impact of future and existing regulation on SMEs and competitiveness in general;

105. Reminds Member States of their commitment under the Small Business Act to make it possible to start a business within 48 hours maximum; calls on the Member States, in this context, to make every effort to reach this target in order to achieve the employment targets contained in the Europe 2020 strategy;

106. Calls on the Commission to address any identified negative effects that EU legislation has on businesses and their ability to create jobs, particularly with regard to the aspects of lack of knowledge, overall perception and lack of support for the practical application of EU legislation; calls on the Commission to improve the flow of information to SMEs;

107. Calls on the Commission, in the context of the REFIT programme, to check that all legislation is doing what it was intended to do, and to identify areas where there are inconsistencies or ineffective measures affecting employment opportunities;

108. Highlights the recent trend of companies returning production and services to Europe and the opportunities this brings for job creation; believes that the economies of the EU have a unique opportunity to accelerate this trend of re shoring jobs and calls on the Member States, together with the Commission, to consider dedicating support, including the possibility of setting up ‘one-stop shops’, to help businesses take advantage of the opportunities offered by re-shoring;

109. Calls on the Member States and the Commission to support self-employment, possibly across borders and especially among women and young people, by creating an environment and developing an education and social protection system that will encourage entrepreneurs to set up and develop their businesses and create new jobs by, for example, promoting entrepreneurship among students and professionals;

110. Expresses its hope that entrepreneurship will be a more prominent topic in the next years; notes that this will require reflection, particularly with regard to the implementation of the Entrepreneurship 2020 Action Plan; considers that developing entrepreneurial spirit and skills is a sustainable way forward in terms of job creation, more start-ups and business innovation; would like to see the Commission name 2017 the ‘European Year for Entrepreneurship’;

111. Calls on the social partners to embrace smart regulation tools, increase the use of impact assessments in their negotiations, and refer agreements proposing legislative action to the Commission’s Impact Assessment Board;

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112. Insists that the Data Protection Regulation should follow a balanced approach, protecting data privacy while stimulating the digital economy, job creation and growth;

113. Calls on the EU to work with Member States, universities, research establishments and businesses in order to coordinate and make full use of EU funding sources (e.g. ESF, ERDF, COSME, Horizon 2020 and Erasmus+), in order to promote an entrepreneurial culture, particularly among women and young people, develop and upgrade the qualifications and skills needed by the labour market, and support the creation of new businesses;

114. Calls on the EU and the Member States to cooperate on introducing entrepreneurship skills into curricula at all stages of education;

115. Calls on the EU to work with Member States, schools and universities on the implementation of open technology-based education;

116. Instructs its President to forward this resolution to the Council and Commission.


Unemployment is the biggest social challenge facing Europe at the moment. In July 2013 the unemployment rate for the EU as a whole was 11%, and for a number of Member States was over 20%. The EU2020 has set a target of 75% in active employment by 2020, and if we are to have a realistic chance of reaching this goal, we need to focus on how Europe can create the right environment for job creation.

We must also remember the overarching principle that it is businesses, particularly SMEs, micro-enterprise, entrepreneurs and innovators that create jobs, not EU growth plans. SMEs and micro-enterprises currently provide 90 million jobs in the private sector in the EU. This is where there is huge potential for job creation, for growth and innovation. Considering that 85% of all new jobs over the past 10 years have come from SMEs we must ensure that the needs of SMEs are put at the centre of policy making.

The EU and particularly Member States have an important role to play in supporting businesses by improving access to finance, encouraging entrepreneurship, and most importantly by exploring new ways of creating the right regulatory environment.

Businesses can only create jobs and recruit more people if the market allows for it, if they can rely on a qualified workforce, if labour markets are sufficiently flexible, if labour costs including wages are in line with productivity, if social protection systems make work attractive and if regulation is proportionate and evidence based.

There are some big challenges to be addressed and while acknowledging the broad spectrum of political views on this issue, this Report seeks to address a number of issues including how the EU and Member States can improve access to finance, promote entrepreneurship and develop better regulation.

A number of key points have been stressed, first, that businesses and in particular SMEs and microenterprises must be equipped with the knowledge and know how on how to access EU support through for example one stop shops and web portals.

Secondly, given that the number of EU citizens that want to be self-employed has dropped from 45% to 37% in the last 3 years, it is important that an entrepreneurial spirit is nurtured from an early age right through to university and that every effort is made to make it easier for sound businesses to survive and for honest entrepreneurs to get a second chance.

The Report in particular welcomes innovative initiatives that help entrepreneurs including the CREATE programme, Erasmus for young entrepreneurs and the Entrepreneurship Strategy 2020.

Thirdly, it highlights that growing international competition driven by increasingly skilled workforces have left the EU facing serious skill shortages and skill mismatches which are acting as a brake on economic growth. There is a clear trend towards more skill intensive jobs. The vast majority of the jobs that are expected to be created or become vacant by 2020 will require medium or high qualifications.

EXPLANATORY STATEMENT

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More notably, by 2015, the estimated shortage of qualified ICT staff in the EU will rise to somewhere between 384,000 and 700,000. The supply of science, technology, engineering and mathematics skills will not match the increasing demand of companies.

Central to this is the need to create the right regulatory environment, by removing unnecessary barriers which impose disproportionate costs on businesses and inhibit their ability to grow, create jobs and compete globally.

It highlights a number of initiatives including ‘think small first’ principle, the “SME test, the REFIT programme, the Commission’s ‘Top 10’ most burdensome laws (which identified the Working Time Directive and Temporary Agency Directive as either too complex or containing disproportionate requirements on SMEs) all of which will help ensure that legislation is doing what it was intended to do.

Legislators have a responsibility to ensure that any regulations or proposals they put forward encourage job creation and do not impose disproportionate or ill-considered burdens on business.

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TRANSCRIPT

ANTHEA MCINTYRE MEPConservative Employment Spokesman, United Kingdom

I am so pleased that our Committee has decided to hold this hearing and to write a Report on this important topic. I am also delighted to have three experts in the field and I am very grateful to them for coming today.

Unemployment, and especially Youth Unemployment, has been a major concern for the Employment Committee. So I think all of us are interested in how the EU can contribute to creating an environment which supports businesses and gives them the confidence to invest, grow and create jobs.

As someone who has run two, very different, small businesses for over twenty years before joining the Parliament, I am passionate about helping SMEs and especially micro-businesses to thrive.

The EU has some interesting policies and projects in this area such as the Think Small First principle and the SME Test. Also the Commission’s initiative which has identified the top 10 most burdensome EU laws for SMEs.

I have already been the Rapporteur on two opinions regarding SMEs – on cutting red tape and on access to finance – both of which received full support from this Committee.

I hope that we can continue to build on this work.

As we know, SMEs and micro-enterprises currently provide 90 million jobs in the private sector in the EU. This is where there is huge potential for job creation, for growth and for innovation. Particularly, as 85% of all new jobs over the past 10 years have come from SMEs.

We have some big challenges:

l The number of people in Europe who wish to be self-employed has dropped from 45% to 37% in the last three years. Almost half are afraid of going bankrupt and more than 50% say it is difficult to obtain sufficient information on how to start a business.

l Growing international competition driven by increasingly skilled workforces. The EU is faced with serious skills shortages and skills mismatches which are acting as a brake on economic growth. There is a clear trend in the EU towards more skill-intensive jobs. The vast majority of the jobs that are expected to be created or become vacant by 2020 will require medium or high qualifications.

l By 2015, the estimated shortage of qualified ICT staff in EU will rise to somewhere between 384,000 and 700,000. More generally, the supply of Science, Technology, Engineering and Mathematics skills will not match the increasing demand of companies.


There is, of course, a broad spectrum of political views and a variety of Member States represented on the Committee and here today. Some colleagues come from a background in Trade Unions and others, from business large and small. Some come from countries with high levels of unemployment and deeply affected by the economic crisis. Others come from counties whose economies are growing and where unemployment is falling.

The fact that we are discussing how the EU can contribute to creating the sort of environment where employers can do just that – employ, demonstrates our commitment to all those who are seeking work.

As Rapporteur, what would greatly assist my work in preparing the Draft Report is to hear from our speakers:

l How regulation can be better tailored to work with the grain of how businesses actually operate?

l Experiences of the EU rule making process at present and how it can be improved?

l What practical administrative or regulatory changes have you experienced which have made it easier to advertise for a new employee?

I look forward to a fruitful and lively discussion that I hope will set the scene and bring forward some concrete proposals that we can include in the Report.

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TRANSCRIPT:

MARK HOBAN MPMinister of State, Department for Work and Pensions, United Kingdom

Madame President, thank you very much and thank you for inviting me to give evidence in this session this morning. It’s the first time I’ve ever addressed a European Parliament Committee, so it’s a particular pleasure… (interrupted by Ms. Berès) Well, there’s nothing that ceases to surprise us all in politics! But I think one thing that unites us all regardless of which country we’re from, which political party that we’re from, is the need to tackle, I think, the biggest social challenge that Europe faces at the moment, and that’s unemployment. In July this year the unemployment rate for the EU as a whole was 11%, and for a number of Member States it was over 20%. In the UK, the figures we published last week showed that the unemployment rate had actually fallen to 7.1% below the average of the EU as a whole. But if we were to bring down and point further across Europe, what we need to focus on is creating more jobs. But it’s not the EU or Member States that create jobs. It is actually businesses. And over the last 10 years, if you look at where those jobs have come from, predominantly the jobs have come from small and medium sized enterprises. They account for 85% of the jobs created in the EU. So I think it’s really important that we do all that we can to encourage SMEs to set up, to grow, to develop, so they can recruit people, so they can give actually hope and opportunity to those who are currently unemployed. But I do think the key role for business – for the EU and for Member States – is to create the right framework, the right environment, in which businesses can thrive. That’s what I want to talk about in my contribution today. I want to talk about how we can support lending to businesses, how we can encourage entrepreneurship, and how we can create the right regulatory environment for businesses. I want to illustrate that by talking about some of the work that we’re dealing with in the UK to help tackle those problems by resolving issues in those three areas. Let me just say a bit more about the UK labour market first. We’ve actually got more people in work than ever before, and we saw last month a drop in the number of people – the proportion of people – who are out of work through economic inactivity. There are nearly 30 million people aged over 16 in work in the UK, and that’s up by 275 000 on the previous year. The growth has been driven by an increase in private sector employment. Private sector employment increased by 114 000 over the past 3 months, more than offsetting the 34 000 fall in the number of people working in the public sector. And we’ve got more women in work than ever before – up 39 000 on the previous quarter. And since May 2010, the private sector’s created 1.4 million new jobs in the UK. That’s 3 jobs for every one lost in the public sector through… as a consequence of the austerity plans we’ve had to introduce. So it does demonstrate, I think, you can have jobs creation in the private sector at the same time that you’re tackling the government deficits that many Member States face. So why have we seen that resilience in the labour market? I think what we have seen in the UK is flexibility. The flexibility in the labour market has helped achieved low levels of unemployment in this recession than in previous recessions. During the worst part of this recession, when overall employment levels were falling, part-time and temporary employment actually rose. And this continues in the early part of the recovery. It was the flexibility in the labour market that encouraged employers to keep staff, and to take on staff on the part time or temporary contracts, and there was willingness on behalf (on the part?) of those who were unemployed to take up that, because they saw that as a step into full-time and permanent jobs. And actually what we’ve seen over the course of recent months, and over the course of the last year, is that job growth has actually come from full-time, permanent jobs, and we’ve seen a contraction in the number of part-time and temporary jobs. And that demonstrates actually that flexibility in the labour market around part-time and temporary work is important when you’re going through a downswing to cushion the fall in


unemployment, it helps businesses if they want to start to recruit people – feel they can make a recruitment without locking into permanent and full-time jobs – but when the quality of the recession improves, when you start to see the economy turn a corner, employers can turn those part-time and temporary jobs into full-time and permanent work. Let me just say a little bit about lending. We recognize as a consequence of the financial crisis there was a reluctance on the behalf of banks to lend… to estimate. That’s why last year we introduced the Funding for Lending scheme, and it creates incentives for banks and building societies to lend to businesses by reducing their funding costs, and actually help pass on that reduction in funding costs to businesses, so businesses, and households in fact, should see a reduction in their interest rates. We’ve also been encouraging entrepreneurship. One of the areas that I think where people can make a real difference themselves and their communities is setting up their own business. And we launched the New Enterprise Allowance that gives support to people who are unemployed. It gives them a mentor to help them develop a business plan, and gives them financial support once their business is up and running. And as a consequence of the New Enterprise Allowance, 2000 new businesses are setting up every month in the UK… being set up by people who were previously unemployed. And let me just give you a story to illustrate this. Last week I met Hayley. Hayley lives in West Wales. She was unemployed, and through the New Enterprise Allowance, she set up a nursery called Lion’s Den. She now employs 17 other women, all of whom were unemployed. Her decision to set up her own business has given hope to other women in her community. And I think that’s one of the very powerful messages we can see from self-employment. Recognizing for many new businesses there is a challenge about getting funding, we also launched a start-up loan scheme, which provides loans to young entrepreneurs between the ages of 18 and 30, helping them support their business. And that’s actually helped launch 7,000 businesses. That’s on top of the 26,000 that had been launched as a consequence of the New Enterprise Allowance. But central to the government’s plan for growth is creating the right regulatory environment, by removing unnecessary barriers, which impose costs on business. One of the things that we did when we came into office in 2010 was to introduce a one-in-one-out rule. And that meant that any increase in the regulated burden on businesses had to be matched by an equivalent decrease elsewhere. And this actually puts some real pressure on government Ministers, myself included, to ensure we did actually think about the regulation introduced. Was it going to really add value? But then forces also to identify regulations that we should remove. And I think that’s been a very powerful tool in forcing governments to think very carefully about imposing new burdens on businesses, burdens which could lead to a reduction in employment opportunities. So far, our one-in-one-out rule has actually saved 1 billion euros, and I think that’s been a significant help to businesses, I think it’s helped

Anthea with Mark Hoban MP at the hearing

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boost jobs and growth. To give us further incentives, as government, to reduce the burden of regulation, we’re moving from one-in-one-out to one-in-two-out. So actually we’ve got to double the regulatory savings for any new initiative that we introduce. We’ve also been reaching out to businesses and others to identify where we can actually reform regulation. And we’ve launched a red tape challenge which encourages different business sectors to come forward with ideas to the way in which we can simplify and smooth and actually reduce the burden of regulation on businesses trying to promote jobs and economic growth. The reforms we’ve introduced through the red tape challenge have actually saved businesses a quarter of a million euros a year. And that’s a significant contribution, I think, to helping businesses free up time and resources, to help them focus on what they should be doing, which is to grow and to recruit more staff. There’s a very rigorous scrutiny process in place, including the establishment of an independent regulatory policy committee, to assess governments’ estimates of costs and benefits of new regulation. We can’t just use figures off the back of a cigarette packet. We actually do need to go through a rigorous process to ensure… rigorous independent process to check that the estimates we’ve put forward are robust, are sound, and are evidence-based. And it’s only if the regulatory policy committee gives our assessments a green light that we can actually then seek approval from other government ministers to put forward change to regulation. But I think the work we do at a national level does need to be complimented by what’s happening at EU level. So I do welcome the Commission’s work to identify the top ten most burdensome laws for SMEs, and in particular, committing to review the acquis on Health and Safety. I’m also responsible for the Health and Safety Executive in the UK where we’ve actually gone through a very rigorous process to simplify the health and safety law without reducing the protection on employees. And that’s a very important part of our… you know, there are ways in which we can simplify guidance, make it… make the process for compliance much more straightforward, clearer. And we’ve done that whilst maintaining the UK’s record of actually one of the safest places in Europe to work. I welcome the Commission’s work on regulatory fitness, Refit, and I hope we will see an ambitious communication from them before the October European Council – one that includes specific concrete measures to reduce the cost of regulation for businesses, particularly for SMEs. I think we also need to make sure we properly adopt the ‘think small first’ process, when considering new proposals at the EU and member state level. We should look at the ways which can strengthen the application of the SME test and understand the impact of proposed legislation on small businesses. It’s very easy for large businesses to cope with change to legislation. It’s much harder if you’re an owner-managed business. That lady I talked to you about in West Wales… she’s responsible for the employment of 17 people. The more bureaucracy and regulation we apply to her, the harder it is for her business to grow. So we do need to think about the impact on small businesses, and I would hope the Employment Committee, Madame Berès, also makes full use of the Parliament’s own impact assessment unit to think through the impact of changes and proposals that you make. In conclusion I do think we should be doing all that we can to ensure that we create more sustainable private sector jobs. That is ultimately the responsibility of business to do that, as has happened in the UK over the last 3 years. But the responsibility that we have as legislators, as the executive, is to ensure that the regulations we put forward actually help encourage job creation… that we don’t impose disproportionate or ill-thought-through burdens on businesses. We do need to get the balance right. Because if we don’t, the people who suffer are those without work, the many tens of thousands of young people across Europe, who want to work but can’t at the moment. We have a duty to them to think very carefully about the cost of regulation and the impact it has on their prospects and their future. Thank you very much.


RESPONSE TO QUESTIONS:

Thank you very much, and there have been some fascinating contributions. And I just want to say this about competition. You know, we’re not talking about competition just between EU Member States. We’re talking about competition between the EU and non-EU states. And we are in a global race. If we don’t compete with the rest of the world we will lose jobs. Europe will see reduced prosperity, fewer opportunities for young people. So we shouldn’t just be thinking about competition between Member States, we should recognize what’s going on outside the boundaries of the EU, and having a debate in isolation creates a sense of a fortress Europe, which I don’t think reflects economic reality. There are some challenges… Cercas talked about health and safety. Look, you know, actually it was Conservative governments that introduced health and safety rules back in the 19th century, you know, and we lead reforms in the early 70s to produce the framework for health and safety. But bad health and safety laws can be a barrier. Let me give you a good example. We all want young people to get into the work force, to experience what it’s like to be in a business. We had over 80 pages of rules around young people working in the business. It stopped businesses recruiting young people! It was too complicated. The only people who won out from this were health and safety consultants. We’ve actually reduced it to 5 pages. We haven’t reduced the protection for young people at all; we’ve just made it more straightforward and clearer… the burdens on employers. And that’s a huge advantage. So I think you can make progress in tackling the burden and regulation without reducing worker protection.

Phil Bennion talked about apprenticeships, and there were a couple of comments about investments. You know, we’re funding an extra quarter of a million places for young people to become apprentices. When I was growing up, apprenticeships were around steel-making and ship building, and coal mining. We see modern apprenticeships in the UK covering a wide… much wider range of sectors: care, media, hospitality, administration, advertising… It’s really important I think that we continue to invest in our young people. Actually investing in our young people and improving their productivity improves their earning potential, and that improves the ability of their businesses to compete in that global marketplace. So we do need to continue to train. One of the things we have introduced – and long-term employment’s a real challenge in the UK – we’ve actually introduced a payment buyer results model, which I think the Spanish are actually looking at, at the moment… where actually we reward contractors for getting people into work, to break the cycle of long-term worklessness. They only get paid if someone’s been in work for 6 months or more. That’s a very powerful incentive. It’s good value for the taxpayer, it’s good for the unemployed, because they get the support they need to get into work, and it tackles that culture that exists so often in some of our communities. I think on the issue about false self-employment – sometimes we need to look at what is driving this, and is it actually a response to the rigidities and labour market regulation? I talked to my Italian opposite number – we were talking about some of the challenges around permanent workers, and actually the inflexibilities of the Italian labour law. And that means more people doing temporary work. And is false self-employment really a response to problems of (?) the tax and regulatory system? Let me talk about living standards and zero-hour contracts, which you’re particularly keen for me to talk about. Let me go back to what I said in my speech. The increase in employment over the course of the last year in the UK comes from full-time, permanent jobs, using definitions provided by the ILO. And if you are working full-time, you count as full-time working, if you’re not working you’re counted as unemployed in those figures. So the increase in the employment in the UK is from full-time, permanent employees. It reverses what we saw in the earlier part of the recovery in the recession. But of course, for some businesses, zero-hour contracts provide flexibility. Actually for some people, zero-hour contracts help them as employees – they want to vary their hours, to take into account what they… their working commitments, their family life, perhaps their health conditions. But the increase in employment in the UK has come from full-time, permanent contracts, and I think the campaign on zero-hour contracts is actually seeking to undermine people’s confidence

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in the recovery that we’re seeing in the UK. You know, there is an argument – if a business actually is seeking to expand and grow, they may not be able to recruit someone on a full-time basis. Isn’t it right therefore, rather than leaving someone sitting as unemployed, they should recruit someone on a part-time basis, as a stepping-stone for a full-time job. So I think that we should be very careful about being disrespectful – the important role part-time employment can play in getting more people into the work force, and helping building the recovery. And yes, wages in the UK have been second in real terms over the course of the last couple of years. But let’s go back to what happened in previous recessions. It was fine for those who were in work. They got, you know, pay rises of 10, 12, 13, 14%. Those who were out of work relied on benefits, and what people have decided in this recession is they’d rather temper their wage increases and be in work, and rather temper their wage increases rather than see their children or their grandchildren unemployed. So there is a trade-off there that we need to recognize. I’m just responding to the points Madame Berès. And so I think this is the trade-off. But what we need to do is to make sure that we have the competitive labour market, we invest in people, invest in skills, we get more… we have welfare reforms, get people into work. And I think if we have a competitive European economy, one that competes with the best of the world, we will see people in work, and we will see living standards rise. The price of not delivering that is seeing more people unemployed and more people actually suffering from falling living standards.


TRANSCRIPT:

SYED KAMALL MEPLeader, European Conservatives and Reformists Group (ECR), United Kingdom

Thank you very much, Madam Chairman, thank you very much, Minister and the other speakers.

One thing that is probably more of a request, if you like, in a way, is that we are very good on the left and the right about talking about top down solutions; ‘What can the EU do to create jobs?’ ‘What can Member States do to create jobs?’ Well what we don’t do often enough is talk about how we encourage grass roots generation of jobs and grass roots businesses, ‘cause quite often you don’t actually need that much money to start a business.

I know the Minister gave an example of someone who started her own business, but actually I think of a couple of examples that come to mind. I think of a lady actually who quite often comes out to Brussels and sits on the Economic Social Committee, Madi Sharma. She was an Asian housewife, a single mother, victim of domestic violence, and she started a business with ten pounds. She made four samosas, sold those four samosas, made eight samosas, and so on, until she created a company with two factories, employing sixty-five people, making sixteen thousand samosas and bhajis a day. That shows you don’t actually need that much money. There are my constitutents – two young lads, who went to the market, borrowed fifty pounds from their mother to buy some cloth, borrowed their mother’s sewing machine, and created a boxer short business. Once again it shows you don’t need that much money to start a business.

And it’s all very well us having these top down solutions, but how do we encourage the grass roots? And you go to some of the poorest communities, I go to some of the poorest communities in my constituency of London, from the social housing communities. They are hubs of entrepreneurial activity. Some of them are the informal economy, unfortunately sometimes it’s illegal activity, but it shows that there’s an entrepreneurial spirit, and one of the things I think we have to be humble about, as politicians and others at EU level, is how we help those grass roots. I’m working on a project at the moment in the UK. Have any of you come across the website kiva.org, which allows people around the world to crowdfund entrepreneurs in developing countries, so I can lend in chunks of 25 dollars, to an entrepreneur, say, in Burundi, or in the Middle East. Now one of the things I’ve been trying to do is set up a similar project in the UK. The bureaucracy I’ve had to face, the problems I’ve faced trying to get the right people on side, making sure that I’ve got a certified CDFI, a Community Development Financial Initiative, which is a microfinance. But at the end of the day we should end up with a solution where anyone can go through a bit of due diligence, post their project online, and people can choose to lend to them in chunks of ten pounds or twenty pounds.

Doesn’t need very much money, but, it’s all very well talking here about what we should be doing at the EU level, but how do we make sure that often we get out of the way, or we create the right environment for grass roots businesses – people who start a small business and can employ people in their local community in the future?

Thank you.

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ANTHEA MCINTYRE MEP

Closing speech:

Thank you very much. Well really I want to thank all three of our panellists for coming today and sharing experiences, and especially Mark Hoban, as it’s not often we have a government Minister willing to come and address our committee, and I’m really grateful to you for coming today. I’m also very grateful to colleagues who’ve shared in this hearing and raised a number of interesting points. I’m going away with two particular things to think about in drafting the Report. One thing that’s come over very much is the question of reducing regulation. And we’ve tackled the question of health and safety legislation head on, and I think the important thing there is that we reduce the regulation without in any way reducing the protection for employees in the workforce. And that I think is something that we will get agreement with across the board. I think it’s great that one of the things we can do in the European Union is share best practice, and we’ve heard some examples today. We’ve also heard – I was very interested in Mrs Jazlowłecka’s experience of setting up a business and facing six procedures and 32-something days and considerable cost. If we can reduce that, then we can help more businesses grow. And the importance of encouraging entrepreneurship – from school onwards… And just let me close by telling you that a university from my own region – the University of Wolverhampton – opened its offices here in Brussels this week. They call themselves the University of Opportunity. They take 75% of their students from within the Black Country region – totally close to home – and 90% of their graduates get jobs. Now the importance of the partnership between education and business I think is huge, and I think I’m going to have a huge challenge to get all of this into our Own-Initiative Report in 6000 characters, but I will try.


About the Report’s author:

ANTHEA MCINTYRE

Anthea McIntyre became a Conservative MEP for the West Midlands in December 2011. She was appointed as the Conservative Employment Spokesman in January 2012 and re-appointed in July 2014. She is also the ECR Group co-ordinator on the European Parliament’s Employment Committee.

A successful business woman before entering the European Parliament, Anthea has a wealth of experience in running an SME and an undoubted passion for removing the obstacles and red-tape that strangle so many businesses.

Promoted by the West Midlands Conservative MEP Team (ECR Group)The Chapel, Wythall Estate, Walford, Ross-on-Wye, HR9 5SD

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Anthea McIntyre MEPConservative Spokesman on Employment

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